Firm survival in new EU member states

Abstract:
We analyze firm survival determinants in four new European Union member states (the Czech Republic, Hungary, Poland, and Slovakia). We employ the Cox proportional hazards model on firm-level data for the period of 2006 to 2015. We show that in all four countries, less concentrated control of large shareholders, higher solvency, and more board directors are linked with the increased probability of firm survival. However, an excessive number of board directors has a detrimental effect. Firms with foreign owners and higher returns on their assets exhibit better survival chances. Conversely, across countries and industries, larger firms and those hiring international auditors have lower probabilities of survival. A number of specific determinants influence firm survival in different ways, emphasizing the importance of country and industry differences when studying firm survival. We also document that in an economic sense, determinants associated with the legal form, ownership structure and corporate governance show the most beneficial effects with respect to firm survival.